Roth IRA penalty

Forum|Forum|7 years ago
June 1, 2019
1 reply
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I took out a Roth IRA and had to cash it in early due to medical expenses, do I have to pay taxes and a penalty on the withdrawal? The money used for the Roth was after tax dollars. I was already taxed on the money, so do I pay taxes on it again? Also the was no gain at all, it fact a loss.

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Best answer by Irene2805

No. You are probably not taxed on the distribution from your Roth IRA.

The return of your contributions is not taxable because you already paid taxes on it.

Any part of the distribution that is considered earnings would be taxed unless:

the distribution occurred after a five-year holding period. [The five-year holding period begins on the first day of the first year you started making contributions to the IRA.]
you are age 59-1/2 or older
the distribution is due to death or disability; or
the distribution is eligible for the first-time homebuyer's exception

Irene2805Answer

Level 15

No. You are probably not taxed on the distribution from your Roth IRA.

The return of your contributions is not taxable because you already paid taxes on it.

Any part of the distribution that is considered earnings would be taxed unless:

the distribution occurred after a five-year holding period. [The five-year holding period begins on the first day of the first year you started making contributions to the IRA.]
you are age 59-1/2 or older
the distribution is due to death or disability; or
the distribution is eligible for the first-time homebuyer's exception